Don’t get me wrong — I fully agree with what the Chosun Ilbo’s Park Jung-hoon suggests — it’s bargain time in the United States, and if Korean firms can take advantage, more power to ‘em. It’s better than putting the entire country in hock to the Bank of China. It’s just that, well:
There are plenty of deals to be had in the U.S. We could buy insolvent overdue bonds at discount prices or purchase small regional banks. This is a golden opportunity for South Korea. When the situation in the U.S. improves the gate will surely slam shut again. But while the gate is open, we should do just what America’s financial firms did to us 10 years ago.
I’m not suggesting that we enjoy the Schadenfreude, rather I’m saying we ought to make the most of an opportunity, just as the Middle East and Singapore are doing. Knowing that we can make money off of crocodiles makes the world a very interesting place.
Yes, and when your investors try to flip their properties for like, you know, profits, we’ll be sure to press criminal charges on their American partners, subpoena the Korean CEOs and slap travel bans on them when they arrive in the United States.
Not that I’m suggesting we enjoy the Schadenfreude, of course.
(HT to reader)
29 Comments
Hey “Schadenfreude” is “my” word! I don’t remember signing a release to Park Jung-Hoon! Dang koreans will never respect intellectual property…….
Sparkling!
Hey, whoever wants to finance the free-wheeling, consumptionist lifestyle of these United States, I welcome them! Heaven knows we could use a bail-out from the whole sub-prime thing.
this poor man needs international finance 101.
the analogy between the sub-prime meltdown and the asian financial crisis is deeply flawed, and the style of writing used borders on yellow journalism.
however, as most global finance in korea is a decade or two behind the U.S.,financial participation in this crisis should speed up their international finance learning curve. and, rightfully, it will allow the investors, the recipients of the funds and the global economy in general to move towards more healthy growth.
There was a decent conversation on Charlie Rose about sovereign wealth funds and overseas investors buying into (and thereby rescuing) freshly-wounded US banks. Not so much about Korea but rather the subject in general.
The vid’s from http://www.charlierose.com
Guess you can’t embed video in comments…
Here’s a link:
http://www.charlierose.com/sho.....eign-funds
Judge Judy, I’m not sure I see what’s so wrong with the article. The ‘97 crisis saw foreign debt in the opposite direction, plummeting Asian currencies, real estate bubbles popping and massive credit problems, so I’m not sure why it can’t be compared to the current US problem. Maybe I’m missing something?
this poor man needs international finance 101.
the analogy between the sub-prime meltdown and the asian financial crisis is deeply flawed, and the style of writing used borders on yellow journalism.
Because….?
You gotta love how the Chosun Ilbo referred to the US as “crocodiles” for helping Korea out 10 years ago.
What would it sound like if CNN referred to Korea’s investments in the US in similar reptiloid terms? “Koreans are a bunch of lizards, this is Richard Quest…”
I don’t think anyone would take Richard Quest seriously.
I read in the papers today that these same banks that are reporting losses fit for the Guinness Book of Records are also giving out bonuses totaling $39 billion.
My co-worker today was bitching about a $6000 decline in his 401(k). I told him that $6000 became some asshole’s bonus.
Something is definitely rotten on Wall Street.
It is often noted that Korea will sink with China’s rise. But take a real good look at who will be the true loser. It will be the United States. Read today’s Chosun Korean language edition. China is rapidly replacing the United States in economic influence all over the world. Do Americans even know how far they are falling?
This rottenness is a revelation? It’s a different world up there in three comma land. There are rules for and ways of moving/making/preserving wealth we will never even get hints of. None of it for the benefit of humanity.
“I don’t think anyone would take Richard Quest seriously.”
People take him seriously now?
Bin Laden is laughing his ass off in his cave somewhere.
man, why doesn’t this post comments?
#13
Are you telling me you don’t take Richard Quest seriously? The one and only truthful source of news?
http://richardquest.worldbreak.com/about.html
ok it posts when i don’t want to.
#13
Are you telling me you don’t take Richard Quest seriously? The one and only truthful source of news?
richardquest.worldbreak.com/about.html
Ok I guess you can’t post anything starting with http, i get it.
#14
A Recession!?!? Why, there’s never been one of those, before…
Actually, they’re starting to say a Depression.
I don’t know what judge judy’s background or profession is; I’ve just got a garden variety MBA, but I’ll take a stab:
Asian financial crisis was a debt crisis. The afflicted countries had used their banks as conduits for loans to select multinationals, which overinvested in excess production capabilities. International financiers kept backing their excessive borrowing because the Asian governments, of course, would back their domestic banks. Sort of like the US gov’t backs its T-bills.
The debt got too heavy. The debt was also in foreign currencies, of course. These economies are famous exporters, but they have to import intermediates to manufacture their exports, and those must be paid for in dollars. It got to the point where the Asians’ export earnings weren’t brining in enough foreign money to service their debt. The Asians ran out of dollars (this tanked their currencies of course. When the big Asian exporters MUST get dollars to pay their bills and keep their trade going, that makes dollars more valuable to them, flip side being that their own currencies become less valuable) The financiers pulled the plug. The IMF stepped in with liquidity and demands for banking reform.
Summary: in the Asian crisis there was no money. The entire economic model was choking. The Asians were broke. Therefore, their companies could be purchased cheaply.
Subprime is different. The US writes its debt in its own currency, which is a relief. And there is lots of money around, both inside the US and abroad. There is no problem finding funds now. The problem is that recklessly overvalued investment vehicles (MBS&CDO) got spread around the financial system, to the point where the world’s financial institutions don’t know who is holding the most CDOs. We don’t know where they are, we don’t know what they’re worth. A big bank could theoretically go bust at any second. That makes the banks unwilling to do business with each other.
Banks on paper are worth billions, but they don’t keep much cash around. Banks absolutely require the ability to move electronic “money” around between them, based on faith that they’ll be able to settle accounts in real money later. That system is now frozen.
It will get unfrozen. There are enough sharp minds out there to figure it out, but in the meantime the banks need money to operate with. Asia and the Gulf Coast have that money.
Summary: subprime is a banking crisis, even a “technical” crisis, and for now limited only to financial institutions, who only need some technicians to sort this shit out. The only vulnerable entities are the banks, not the entirety of corporate America.
For one thing, Korean banks have already purchased U.S. banks.
@ 9- It seems from the quote that crocodiles refer more to the business interests in the US, not the US itself.
#20
Plenty were saying the same thing in ‘92, ‘87, and the 70’s, as I recall.
#23,
Still, isn’t the term “crocodile” a bit too crude for a journalist or author to use in a public article?
I’m wondering what would have happened if Abu Dhabi, Singapore, Beijing, Seoul and Tokyo hadn’t come to the rescue of the troubled American banks: Citi Bank, Merryl Lynch, Bear Sterns..
The American government would have been forced to intervene and rescue them, and possibly made the greenback and the American share market fall more substantially than they have. It seems American economy is getting relieved relatively easily for their sloppiness this time, at least so far, but next time it may be much harder.
I don’t think it’s a good idea to bring fresh capital into one of those hard-hit American banks at this stage in return for an ordinary rate of interest, unless they get something else more meaningful, when there is still fair bit of sub-prime cloud hanging over the American sky.
I also wonder if the real reason behind the Bush’s visit to the Middle East last week with multiple stops in tiny kingdoms, such as Bahrain, UAE, Kuwait, is financial rather than political.
“The Asian financial crisis of the 1990s has gone into reverse.” Roger Cohen in the NY Times today.
Headlines in recent weeks have focused on the international investors - from Japan to Kuwait - riding to the rescue of such American symbols as Citigroup and Merrill Lynch. The Asian financial crisis of the 1990s has gone into reverse.
http://www.nytimes.com/2008/01.....en.html?hp
# 4,
My senior thesis was on the East Asian Economic Crisis and I can tell you that MOST people have a flawed understanding of it, but Asians, particularly Koreans, have probably the most uninformed view.
I think it’s a matter of national pride for Koreans to think that they hold the keys (or part of the keys) to the viability of one country’s economy or another. In this day of globalization, it is truely an immature thought to have and demonstrates the immature thinking that many Koreans still have when it comes to global finance.